In response, Karn's
counsel stated that it would be "improper for [Atlas Copco's counsel] to talk about that
and talk about the numbers." (Emphasis added.) Whatever the original scope of Karn's
motion to exclude, as the arguments progressed, the motion seemed to evolve to
encompass any reference to either the existence or the amount of the overdue balance
owed by it to Atlas Copco. Ultimately, the trial court appears to have so understood it,
and to have agreed that the limitation on Atlas Copco's argument should be that broad. In
ruling on the motion, the court stated in part, "I'm not going to let you argue that Karn
owed money on the account" and advised counsel for Atlas Copco that the only issue to
be argued by the parties was whether Atlas Copco breached an agreement to assign the
Intalco account to Karn. We agree with Atlas Copco that the trial court's ruling
effectively precluded it from referring to either the existence or the amount of the overdue
account balances. (2)

We next consider whether, as Karn argues, Atlas Copco nevertheless made
the argument that it now claims it was precluded from making, rendering any error in the
ruling harmless. In Karn's closing argument, counsel argued that the case was about Atlas
Copco's "broken promise" to assign the Intalco account to Karn and, because there was
evidence of the promise and Atlas Copco's breach of it, "the question really is" the
amount of Karn's damages. Karn's counsel also argued that Karn was in arrears in 1991
and that it signed a promissory note at that time because of Atlas Copco's failure to assign
the Intalco account; he argued, "If they had never broken their promise, we wouldn't have
a note. We wouldn't be in this position." (Emphasis added.) Counsel asked the jury to
"put [Karn] in the position it would have been" if it had been assigned the Intalco account
during the relevant time period.

In Atlas Copco's closing argument, counsel argued that Atlas Copco had
applied profits from the Intalco account to the 1991 promissory note and that, when the
parties corresponded in 1997 regarding the then-existing overdue balances, Karn did not
mention the Intalco account. Atlas Copco's counsel urged:

"It's just hard for me to believe that an issue that is now just the sole reason
that [Karn is] seeking money wasn't raised in the letter about the status of
this account. This just doesn't make any sense.

"* * * * *

"* * * And if [the Intalco account] is so important, why didn't [Karn] write
one piece of correspondence to anybody -- to anybody about this problem?

"* * * * *

"* * * Why would [Karn] wait? Why would [Karn] wait so long?"

Thus, counsel for Atlas Copco asked the jury why Karn "waited so long" to raise its claim
to the Intalco account. But Atlas Copco, apparently feeling constrained by the trial court's
ruling, did not provide the jury with its answer to that question--that is, that Karn was
exaggerating the existence or worth of the Intalco claim merely to avoid, through an
offset, paying the substantial amount that it owed to Atlas Copco.

On the basis of that record, we agree that Atlas Copco's argument raised a
question as to why Karn was asserting its counterclaim. (3) But Atlas Copco's closing
argument made no reference to either the existence or the amount of the then-existing
overdue account balances. Thus, counsel never answered the rhetorical question he
placed before the jury as to why Karn was now seeking damages relating to the Intalco
account. Consequently, we conclude that Atlas Copco did not in fact make the argument
that it contends it was precluded from making, namely, that Karn asserted its
counterclaim relating to the Intalco account only in response to Atlas Copco's efforts to
collect Karn's current overdue account balances, and that the counterclaim therefore
should be "viewed with suspicion."

We turn, finally, to the question whether the trial court's ruling precluding
the argument was error and, if so, whether the error was prejudicial. Control of jury
argument is left largely to the discretion of the trial court. R.J. Frank Realty v. Heuvel,
284 Or 301, 306, 586 P2d 1123 (1978). The court has discretion both as to allowing
argument and as to precluding argument. For example, the court may preclude argument
that instructs the jury on the law. See Davis v. Pacific Diesel, 41 Or App 597, 608, 598
P2d 1228 (1980) (trial court did not abuse its discretion in "curtailing" counsel's jury
argument relating to the meaning of "preponderance of the evidence" and the law of
"concurrent causation"). The court also may preclude argument that is "inflammatory" or
otherwise improper. See Highway Commission v. Callahan, 242 Or 551, 558, 410 P2d
818 (1966) ("justice demands that arguments be factual and not inflammatory"); Walker
v. Penner, 190 Or 542, 227 P2d 316 (1951) (trial court properly precluded counsel from
making a "highly inflammatory" argument to the effect that opposing counsel's argument
was "a communist's argument"). Conversely, jury argument properly may include
reference to matters that are "within the bounds of the issues and evidence" in the case.
See Myers v. Cessna Aircraft, 275 Or 501, 529, 553 P2d 355 (1976); see also State v.
Simonsen, 329 Or 288, 298, 986 P2d 566 (1999), cert den 528 US 1090 (2000) (where the
challenged statements in the state's closing argument contained information that the state
had introduced as evidence, the defendant "failed to demonstrate how those statements,
which referred to evidence already before the jury, resulted in prejudice"); State v. Bolger,
31 Or App 565, 568, 570 P2d 1018 (1977) ("Counsel during argument is permitted to
comment on the evidence and to draw all legitimate inferences therefrom[.]"). Thus, as to
evidentiary matters, a trial court can abuse its discretion either by allowing jury argument
regarding facts that are not in evidence, Kuehl v. Hamilton, 136 Or 240, 244, 297 P 1043
(1931), or by refusing to allow argument regarding facts that are in evidence. See
Hammons v. Schrunk, 209 Or 127, 139, 305 P2d 405 (1956) (explaining that a trial court
will abuse its discretion if it "den[ies] a party his right to present the material issues of his
cause to the jury"); see also Ireland v. Mitchell, 226 Or 286, 295, 359 P2d 894 (1961) (the
purpose of closing argument is "to persuade the jury to adopt a particular view of the
facts"). Where the trial court has abused its discretion, this court will reverse if the error
was prejudicial. Nord v. Wetmore, 105 Or App 246, 250, 804 P2d 501 (1991). See also
ORS 19.415(2) ("No judgment shall be reversed or modified except for error substantially
affecting the rights of a party.").

As discussed above, documentary evidence in the record established that
Karn currently owed money to Atlas Copco for products supplied to it by the latter and
that Atlas Copco had attempted to collect that debt. In addition, witnesses for both parties
testified about Karn's then-existing overdue account balances. For present purposes, we
are willing to assume that the trial court properly could preclude Atlas Copco from
referring in its closing argument to the amount of Karn's overdue account balances, given
that the precise amount in question was to be determined by the court in a later
proceeding. But Atlas Copco should not have been similarly limited in referring to the
very existence of the overdue accounts and its efforts to collect them. Atlas Copco's
theory was a simple one: That Karn was asserting a claim relating to the Intalco account
only to offset Karn's debt to Atlas Copco and was exaggerating the value of the account
accordingly. That theory ran to Karn's credibility in making the counterclaim and the
weight to be given to Karn's evidence as to the worth of that claim; it therefore was
fundamental to Atlas Copco's defense. To be sure, it was for the jury to decide whether
Karn's evidence in support of the existence and worth of the counterclaim should be
believed. But the jury should not have been left to decide that question without the
benefit of Atlas Copco's argument as to what inferences the evidence supported on that
point.

We conclude that it was an abuse of discretion under these circumstances
for the trial court to limit Atlas Copco's ability to comment on matters in evidence and to
make legitimate arguments as to the weight and believability of the evidence.
Accordingly, the trial court ruling was error. Moreover, we agree with Atlas Copco that it
was prejudiced by the court's ruling, because that ruling prevented Atlas Copco from
effectively and completely presenting to the jury the theory of its defense against Karn's
counterclaim relating to Atlas Copco's failure to assign the Intalco account to Karn.

"What the jury needs to hear--I made the starting point as we sold hard
goods to Karn and have not been paid for them to the extent of [$430,000]
to $475,000. That's to start.

"We performed the distributorship agreement by supplying parts. They
need to know that. They need to know that we -- this Intalco is a side issue
that was brought up to offset what was owed by -- what was owed by Karn,
and I think it's important to the argument."

2. Any doubt about the scope of the trial court's limitation on Atlas Copco's
closing argument is eliminated by the discussions that took place in connection with Atlas
Copco's motion for new trial. Atlas Copco again urged that it had been deprived of an
ability to refer to the debt existing at the time of trial and the timing of Karn's assertion of
the counterclaim, thus precluding it from commenting on evidence that might draw the
credibility of the counterclaim into doubt. Neither Karn's counsel nor the trial court took
issue with Atlas Copco's understanding of the scope of the trial court's prior ruling.

3. We also note that, apparently due to the parties' understanding (shared by
us) that the trial court's ruling applied only to the then-current overdue account balances
and not to the balances that were the subject of the 1991 promissory note, both parties
freely referred to that note, the amounts due under it, and the history of payment of those
amounts. What they did not refer to in closing argument was the existence of any debt at
the time of trial.